The World Bank has sanctioned $1.5 billion to finance India’s low-carbon energy programme. The financing will help India execute its green hydrogen plans, scale up renewable energy projects and enhance climate finance for low-carbon energy investments.
“The programme will support the successful implementation of the National Green Hydrogen Mission that aims to stimulate $100 billion in private sector investment by 2030,” says Auguste Tano Kouame, World Bank Country Director for India. "The World Bank remains committed to supporting India’s low-carbon transition by complementing public financing and enabling private sector investments.”
The $1.44 billion loan is from the International Bank for Reconstruction and Development (IBRD), and is facilitated by a United Kingdom $1 billion backstop aimed at boosting the World Bank’s climate change financing to India. A $56.57 million credit from the International Development Association (IDA) is from a recommitment of cancelled IDA credit balances.
The Ministry of New and Renewable Energy (MNRE) will be leading and coordinating the preparation and implementation of the proposed operation, which will also be supported by the Department of Economic Affairs (DEA) from the Ministry of Finance.
The first in a series of two envisaged programmes – the First Low-Carbon Energy Programmatic Development Policy Operation – of the World Bank will support India in developing green hydrogen. The low-carbon energy is produced by electrolysis of water powered by renewable energy. The bank’s funding is expected to stimulate private financing and other support by addressing viability funding gaps, reducing off-taker risks, boosting grid integration of renewables, and stimulating demand for renewable energy.
The programme aims to scale up renewable energy supply, thereby reducing costs and improving grid integration. This will help India reach its committed 500 GW of renewable energy capacity by 2030. The government plans to issue bids for 50 GW of renewable energy each year from FY23-24 to FY27-28, which will avoid carbon emissions of 40 million tons per annum by 2026.
A national carbon market is essential to provide a level playing field between low-carbon energy and fossil fuels. This programme will support policies for a national carbon credit trading scheme to launch a national carbon market. In January 2023, India issued its first sovereign green bond. The programme will support policy actions for the issuance of $6 billion in sovereign green bonds by 2026.